Romney’s Lead Economist Urges Policies that will Cause the Next Financial Crisis

By William K. Black
(Cross-posted from

Presidential nominees of either U.S. party can secure economic advice from any economist in the world.  This makes it all the more amazing and sad that they choose economists with track records of disastrous policy advice.  Bill Clinton chose Robert Rubin, George W. Bush chose Gregory Mankiw, Obama chose Lawrence Summers, and Mitt Romney chose Mankiw.  Rubin and Summers led the Clinton administration’s efforts to gut financial regulation.  Mankiw led the efforts under Bush.  Collectively, these efforts created the criminogenic environment that produced endemic financial fraud (“green slime”).

Mankiw Morality

I have often emphasized the importance of George Akerlof and Paul Romer’s 1993 article (“Looting: the Economic Underworld of Bankruptcy for Profit”) to understand the economics of why we suffer epidemics of accounting control fraud and recurrent, intensifying financial crises.  Mankiw was the “discussant” when they formally presented their paper.  I was also present at their invitation.  Mankiw was unconcerned about looting.  It was my first introduction to Mankiw morality:  “it would be irrational for savings and loans [CEOs] not to loot.”  I was appalled, but my outrage at Mankiw paled when I observed that the members of the audience, professional economists, were not even made visibly uncomfortable by such a depraved response to elite fraud.  CEOs owe fiduciary duties to the shareholders.  Mankiw’s response to the findings that CEOs were looting their shareholders was to praise the rationality of the fraudulent CEOs (if you don’t loot you aren’t moral – you’re insane).  One cannot compete with theoclassical economists’ unintentional self-parody.

Mankiw Still Loves the Regulatory Race to the Bottom that Breeds Endemic Green Slime

Mankiw wrote a column in the New York Times praising competition among governments.    

I start with a historical note that falsifies Mankiw’s claim that competition among governments is desirable.  Mankiw makes an historical argument for his claim that competition among governments is desirable and notes that the “founding fathers were no fools.”  In an odd way, we can thank our immensely successful Constitution to the demonstrated disaster produced by governmental competition engendered by the Articles of Confederation.  The States competed vigorously – to aid their merchants at the expense of “foreign” States (their neighboring States).  They competed to impose more destructive internal tariffs (and other trade barriers) so aggressively that they crippled commerce.  This is one of the principal defects that led the committee appointed to reform the Articles to instead junk them and adopt our Constitution.  The Constitution created a nation instead of a confederation.  The interstate commerce and supremacy clauses were key provisions of the new Constitution because the framers knew that competition among the States and the new federal government could threaten our nation’s survival.

In the context of public finance and financial regulation Mankiw’s praise for such competition demonstrates that he has learned nothing useful from our recurrent crises.  This column discusses why competition among governments in financial regulation leads to the criminogenic financial deregulation that produces the epidemics of green slime that drive our financial crises.  I have recently explained, in the context of opposing the JOBS Act, why the “regulatory race to the bottom” is an oxymoron designed by regular morons.

Mankiw read these words 19 years ago, but he has never understood what Akerlof and Romer were saying, even though they ended their article with this paragraph in order to emphasize their key policy message.

“Neither the public nor economists foresaw that [S&L deregulation was] bound to produce looting.  Nor, unaware of the concept, could they have known how serious it would be.  Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better.  If we learn from experience, history need not repeat itself” (George Akerlof & Paul Romer.1993: 60).

Competition among governments in the financial deregulation context leads to a “race to the bottom” that produces devastating financial deregulation.  The resultant financial deregulation is “bound to produce looting.”  An economist should have no difficulty understanding this point, for classical economists stressed hundreds of years ago that the government’s central function is to prevent crime of force and fraud.  Even Ayn Rand called for the government to prevent fraud.  Because, as Akerlof and Romer stressed, accounting fraud produces a “sure thing” creditors do not exercise effective “private market discipline” against such frauds.  Instead, they rush to fund the frauds’ rapid growth.

Worse, as executive and professional compensation has become far larger and more perverse, creditors and purchasers can grow wealthy by adopting a “don’t ask; don’t tell” policy designed to ignore even endemic fraud.  Charles Calomiris, who is as culpable as any economists for spreading financial deregulatory dogma globally, suggests that the perpetrators may have deliberately created “plausible deniability.”

“asset managers were placing someone else’s money at risk, and earning huge salaries, bonuses and management fees for being willing to pretend that these were reasonable investments. [T]hey may have reasoned that other competi[tors] were behaving similarly, and that they would be able to blame the collapse (when it inevitably came) on an unexpected shock.”

“Who knew?”

In combination, deregulation and perverse compensation are so criminogenic that they can produce green slime in such massive amounts that slime dominates massive aspects of finance.

Mankiw tries to dress up the question of whether governments should compete as a philosophical dispute about the proper role of government.  That is incorrect in the financial regulatory context.  The regulators have to serve as the “cops on the beat” – and economics has emphasized for centuries the essential need for the government to provide such a rule of law and limit fraud and violence.

We know objectively that Mankiw, Bush, and Romney do not actually favor competition in financial regulation – for none of them opposed the OCC and OTS’ scorched earth campaign to preempt state efforts to regulate predatory lending and seek to reduce mortgage fraud.  The states attempted to offer a competitive alternative to Mankiw, Greenspan, Bernake, and Bush’s indifference to fraud by elites.  That competition could have led to vastly better outcomes for the citizens of the States that wished to be most vigorous against fraud and the nation.  Mankiw was Chairman of Bush’s Council of Economic Advisors during the worst excesses of the federal agencies efforts to prevent the states from regulating entities (e.g., bank holding company affiliates not subject to federal regulation) that spread the green slime through the financial system.  He did not oppose preemption.  Mankiw and his political patrons do not favor competition in financial regulation – they favor regulation so weak that it will be ineffective.  They hate financial regulations that are successful because such regulations challenge their world view that denigrates democratic government and government regulators.

Romney’s choice of Mankiw, one of the leading architects of and apologists for the crisis, as his leading economic advisor would be a superb issue for Obama to use in his reelection campaign but for one tiny problem.  The Obama administration’s policies on financial regulation are created by the likes of Rubin, Summers, Geithner, and Bernanke.  They differ only on the margins from Mankiw.  The entire crew of leading economists for the last three Presidents and Romney has proven catastrophically wrong about financial regulation.  The remarkable thing is that they do not drop their dogmas even after they engineer multiple crises over the course of three decades.  We will soon experience the 30th anniversary of the Garn-St Germain Act of 1982, which set off a renewed “competition in laxity” among the States (principally California and Texas; whose S&Ls, collectively, caused roughly two-thirds of all S&L losses) and produced the criminogenic environment that led to the second phase of the S&L debacle.

There are economists and scholars from other fields that have track records of success as financial regulators.  Note to Obama and Romney:  there is no rule requiring you to choose as your leading advisors the purveyors of green slime and crisis.  A significant number of Mankiw’s students walked out of his class to protest his presentation of failed dogma in the guise of economics.  It is time for all of us as citizens to walk out on politicians who choose ethical and economics failures like Mankiw and Geithner as their advisors.

Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.

Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.

Follow him on Twitter:   @WilliamKBlack

26 responses to “Romney’s Lead Economist Urges Policies that will Cause the Next Financial Crisis

  1. I recently had an email convo with Mankiw in which he refused to admit that middle-class tax cuts are far more stimulative than tax cuts for the one percent. He was too busy to clarify this sentence from one of his textbooks: “[A] tax cut is more likely to raise tax revenue if the cut applies to those taxpayers facing the highest tax rates.” It seems to me that an impressionable young student could read that to mean we should cut federal income taxes on the one percent, which is exactly what Romney plans to do.

  2. Bill Thompson

    Completely agree with Prof Black, for sure no-one owns his opinion. That’s really what he is trying to say here — and he’s been saying it honestly for years but few government economists ever listen.

    People always scream the excuse that “Free markets are good!!” as the main excuse not to regulate the banks and financials. My own argument is a very simple one which relies on one simple premise, and goes like this:

    Free non-manipulated markets are good.

    Banks are not the free markets.

    They are banks.


    So introducing bank and financial regulation does NOT offend the Free Markets creed does it ?

    • Really brilliant bit of logic there. Good luck getting those government economists to listen.

  3. Prof. Black, you are such a clear thinker and speaker, and so BRAVE: as if: “Give me freedom of speech or give me death.” There were several speakers at the INET Conference 2012 in Berlin (“Paradigm Lost”) who proved themselves to be of the same heart and mind: “Give me freedom of speech or give me death”–as they gave their brave, rather incredibly audacious, presentations (some backed by papers available at to the assembly. These were Michael Hudson, Steve Keen, John Kay, and Josef Vogl. I hope that you will consider forming this heterodox Team of Heroes willing and able to “crack the NUT” of closed-system tyranny in “Economics + Politics,” and that you will apply for a handsome grant from INET to fund your purpose. The funding of the grant, and the achievement of this comprehensive, urgent purpose, would serve to prove the everlasting value of New Economic Thinking and its Institute, INET.

    Unless this NUT is cracked decisively and definitively, can a JUST New Economic System be created so that the center will hold for the next “eight centuries” of progress in economic justice that Prof. Hudson spoke/wrote about? Let’s see what a Team of Heroes can do in “the home of the brave.” Thank you.

  4. Sorry Mr. Thompson, but “Free non-manipulated markets are good” if and only if you accept the metaphysical assumption of Arthur Lovejoy’s Great Chain of Being. If not, then we are led to axiomatics in which humans create an artificially finite axiom system. Doing so, as even economists acknowledge, “externalities” are unconstrained. Being unconstrained, applicable is the “law of unexpected consequences.” Thus, insofar as participants in “non-manipulated markets” cannot control for variables, inefficiencies will be endemic. This is easily illustrated by excess production being the indicator of a decline in demand. What appears a more plausible conception of the human condition is need to create an invariably imperfect artificial world, and tolerate the imperfections of our intrinsically inadequate creations. Democracy exists to provide the input of the diverse interests required to achieve this as best humans can. To succumb to “non-manipulated markets” is simply to supplant coordinated human effort to create a communal order, for the chaos of a Hobbesian “war of all against all.”

  5. Raymond, so well said. Especially ominous has been the “externalization” of printing in hard copy. First they came for the printing of documents in hard copy formerly done by Federal and State governmental Agencies; then they came for the printing of documents in hard copy formerly done by Corporations; then they came for the printing of documents in hard copy by legitimate book publishers of authentic “books.”

    And how does this march toward the realization of “Fahrenheit 451” profit the Extraction Capitalists? Just as Polaroid (facilitators of home-spun porn) practically gave away cameras while charging astronomical prices for film, so did “Hi-Tech” Extraction Capitalists cut deals with government agencies and corporations to have them “profit” to the nth, by externalizing the cost of printing in hard copy, as their COSTS where SHIFTED to Joe Schmo to the nth. The PRICE to consumers of paper and ink is astronomical, bringing great margins to the manufacturers and sellers (no doubt in league with the said Extraction Capitalists) on these items.

    The realization of “Fahrenheit 451” is almost complete, as the MONOPOLIST was “legally” permitted to get away with commercial practices that violate our Anti-Trust laws and even WTO laws. But then Amazon’s true purpose is to facilitate the elimination of CONCRETELY PUBLISHED BOOKS and “freedom of the press” in the United States, is it not? Who needs FIRE when FAT FINGERS will do, in a trice, to make the American populace terminally impotent as well as ignorant?

    Will there be a discussion of the IMPURE MOTIVES of Digital Emperors of Economics + Politics on this site and on INET’s site in the near future? Is Pandora’s Box completely empty now?

  6. Prof. Black ,
    Thank you again.
    Today, you and your colleages of the MMT school, face a world filled with desperate emergency which, unfortunately, is being addressed by people who are either, throughout the chain of deciding who decides, cravenly cynical and subversive or simply blissfully ignorant of recent global, monetary history. I believe they are the former.

    Since abandonment of Bretton Woods, the Ford/Carter inflation/Oil Embargo, Reagan’s Recession, the S&L Scandal and, Bush’s TARP, we have learned that all of these economic and financial dysfunctions occuring since August, 1971 could have been avoided by understanding the monetary implications of Nixon’s decision, then we could have created policies and legislation to avoid the repeated rape of American assets by private financial institutions. But because we have not learned I fear the plutocracy will resume forcing the regulator’s wink and the banker’s heist.

    I sometimes think MMTers will need virulent criticism of these blatant oversights in POTUS’s economic policies. This necessity is driven by the need to achieve a much broader public awareness of the unnecessary financial burdens thrust upon this nation through the fiction of taxes as revenue. POTUS and others in leadership positons mindlessly mouthing the talking points of the gold bugs…. national bankruptcy is nigh, leaving debt to our grandchildren, and prediciting the insolvency of Federally funded programs, need to be loudly, frequent rebuttal from every credible source. These shiboleths need to be taken one-by-one and debunked. Presenting the counter-argument in every academic, professional forum in the context of axioms along with detailed presentations followed by national circulation and MSM exposure.

    Something along the lines of the following:

    “Does anyone understand what an axiom is?

    1. a self-evident truth that requires no proof.
    2. a universally accepted principle or rule.
    3. Logic, Mathematics . a proposition that is assumed without proof for the sake of studying the consequences that follow from it.

    Here are three which constitute the foundation upon which America’s Federal expenditures are managed.

    Axiom #1 – The Federal Government (Federal Reserve/Treasury) as the sole issuer of our currency, cannot, operationally, be insolvent in that currency.

    Axiom #2 – The Federal Government, as the sole issuer of our currency, is not constrained by revenue per se to spend.

    Axiom #3 – the Federal Government, as the sole issuer of our currency, does not tax or borrow to raise revenue for spending. It taxes and borrows to manage inflation.

    Telling Americans that taxes don’t pay for anything per se is a very volatile statement which generates or should generate debate on just why Federal taxes are imposed. It’s really the crux of our economic policy managment problem. Because we need only guard against the rise in inflation, Americans need to understand that in reality they can keep most of their income no matter where they are on the income scale.

    Implementing these basic talking points is a win-win for America. Dissemblers like Mankiw, Stockman, Sumers, Bernanke, Geithner, Rubin, Peterson, Krugman, Stiglitz, Kudlow, and others will be at a loss to defend their talking points in the context of these axioms.

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    {BT: Free non-manipulated markets are good.}

    Much of that comment depends upon what is meant by “non-manipulated”.

    In America’s hell-bent rush for “bigger is better”, some markets have tended towards oligopolies, meaning too many customers chasing too few suppliers. Meaning further that the latter set the prices that the former must pay. Health Care in America is one such market. How can anyone believe that American Health Care, as a free market, is “competitive” and thus effects best practices at the most affordable cost? Especially when indicators demonstrate the opposite conclusion?

    Ditto American telecoms markets …

    The purpose of business is to generate profits. How those profits are then shared is a mechanism largely in control of corporate Board Members on Compensation Committees. Most of these people are all of the same ilk and highly likely to be One Percenters. Does anyone in their right mind think that these Board Members will not want profits to boost stock prices that benefit corporate management with stock options? Then they would be fools … and not likely be given any long tenure on corporate boards.

    The market has no means to assure fairness to consumers and therefore no remit to be “good”. But governments taxing heavily both marginal and capital-gain income beyond a certain level, then spending such revenues on Public Services (like a National Health Service) do bring about Income Fairness to a nation’s people.

    And that is most certainly goodness.

    • Malcolm MacLeod, MD

      Goodness is most certainly perverted when American Health Care persists in competition for
      profit and whose best practices and most affordable cost are secondary to that goal. Thirty
      four years taught me otherwise. We have needed a National Health Service so long and so
      badly that it almost (is) a crime. We have created a monster profitable industry, where one
      was not necessary. We need a re-think about the goals in outcome of practiced medicine, and
      we have a bit of catch up. Now is the time to start.

  9. Only about 6 months into learning about MMT, so sorry if these questions are basic. I see how MMT principles are a big improvement over the Chicago School, supply side, etc., etc. But, will MMT work in actual practice? Specifically, will politicians ever raise taxes to slow down an overheated economy? Unless higher taxes are preset by law to kick in when needed I don’t think there would be the political will to do that. For now, I completely support MMT. I know of no other perspective that could generate the $$ needed to deal with global warming, starvation & malnutrition, disease, lack of education, infrastructure repair, well – everything. All our challenges are confronted by the Eternal Obstacle – “we can’t afford it.” Could it be we need to look at money itself and ask if a stable fiat system is really attainable? Is it wise to rule out any possibility of a commodity-based currency just because the gold standard didn’t work so well? Remember Bucky Fuller’s proposal of “currentcy” based on an energy unit (1 kwh = 1 penny)? Visionary? Crazy? Both?

    • “Unless higher taxes are preset by law to kick in when needed I don’t think there would be the political will to do that.”

      this is what many mmt writers propose: strong automatic stabilizers that automatically respond to an overheating or chilly economy. keep in mind that not only will taxes increase (perhaps the rates themselves), welfare payments will decrease, shrinking the deficit to a healthier size.

      the mmt job guarantee proposal also has elements that can stabilize an economy.

  10. Pingback: Green Slime is Poison « BanksterWatch

  11. “It is time for all of us as citizens to walk out on politicians who choose ethical and economics failures like Mankiw and Geithner as their advisors.”

    I’m more inclined to walk out on people who speak of political movements, as if that was possible or even desirable. Where does the power to win elections come from, Bill? Who funds the campaigns? Who will donate to your billion dollar Super PAC? Which conglomerated business interests will you have rallying behind you?

    You are as familiar as anyone with the history of the S&L’s and must understand how shareholder democracy works. It may be true that the best way to rob a bank is to own one, but it’s similarly true that the ONLY way to REGULATE a bank is to own one.

    The banks didn’t buy the government so they could be regulated and thrown in jail. Why would anyone expect that to happen? You get what you pay for; it’s just business.

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  16. The best book on regulatory competition is Dale D. Murphy’s “The Structure of Regulatory Competition: Corporations and Public Policies in a Global Economy,” (Oxford University Press 2004/2007).

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  18. Prof. Black, there may be light at the end of the tunnel. You’ll recall that Louisiana lawyers made Big Tobacco pay, to the stupefaction of the Big Boyz (although the lead attorney died young after that). Here’ the heads up: — for link to the suit under title: “BOMBSHELL! CLERKS FROM ACROSS LOUISIANA SUE THE BANKS FOR RICO, WIRE FRAUD, RACKETEERING!”

    Note: Doc 2, Page 21 of 30, [#]40: “The MERS scheme is defective and deficient.” — Q.E.D. A neat diagram on p. 40 illustrates how the racket works in reality. The text is complete. Nowhere to hide.

    Have the Big Banks finally met their match? Hard to “off” that many Clerks of Court at once. The legal chain of title to immoveable property in Louisiana has been sacrosanct ever since the French installed the Napoleonic Code in the Parishes of Louisiana. “You can’t touch that.” This RICO suit will fly.

  19. Bayard Waterbury

    Mr. Black, such a wonderful article so appropriately and clearly encapsulating the scourge of the Mankiw clan of screamers for deregulatory methodology, and apologists for the many splendered fraudsters who pay for their rants and the resultant continuation of social decline through intellectual “capture.” So, why would to seemingly brilliant men, such as Barack Obama and Mitt Romney continue on this path to our eventual destruction, assuming that no sanity ultimately prevails? The only possible answers are two, the first being the one I just mentioned, intellectual “capture” (which explains how guys like Rubin, Summers, Bernanke, Greenspan, et al, continue to subscribe the the Randian pure greediness which pervades the wealthy elite so thoroughly), and the resultant buying of the government by the beneficiaries of such policy proponents, aided by our outdated election laws, and enforced by a continuation of the ultimate takeover of the corruptive influence of the desire for wealth as a subtitute, very Machiavelian, for rational morality. Such capture has made the pronouncements of the apologists virtually tantamount to religious dogma. In fact, it is a reminder that all societies, thoughout history, have, at key times been subjected to the corruption of power and money, thus leading to their eventual decline and failure. We can see this influence in every area of government endeavor, even to the point that “generosity” is actually used as a method of control by the policy makers (explaining why things like Food Stamp, Social Security, Medicare/Medicaid have continued, essentially unchanged, because they create a false sense of our government caring for and about us). I would note that the plutocracy which has generated our present situation has achieved what they consider nearly complete control such that we will, unless things change drastically, eventually lose these social “perqs.” With guys like Paul Ryan gaining so much traction, and with the public being fed misguidence by virtually the entire “mainstream” media (which is a co-conspirator with the plutocracy, sort of a branch for propaganda purposes) and remaining nearly completely ignorant (after all how many will even read any of these constructive blogs?) we can expect to maintain this decline, which threatens to further accelerate regardless of who wins the election in November. With Romney, I would argue, we can only expect a more rapid decline, but even with Obama there is still nearly absolute certitude of its continuation. What we need to do is to get guys like you into the mainstream media to awaken and arouse our abused electorate. We also need a Constitutional Convention to change our election laws, if only to remove private money entirely.

    What will happen, sooner or later, is that this country will fail unless there is a real revolution. How many people will starve before we get there? If Schneiderman’s non-starter Task Force, greeted with such optimism is any indication (vs yours during the S&L crisis, an order of magnitude larger, even if Eric’s group finally actually starts working — it will be underfunded without question, of course), we can simply know, beyond a shadow of a doubt, that noting can happen unless the entire downtrodden public is able to grow a spine.

  20. I think it is the nature of big banks, big government, big agriculture and big businesses to grow one another mutually, to the point of developing their own norms, quite independent of what the rest of society may need or want. The will of a powerful “special interest” is in its power to define the policy, practice or debate by virtue of the size of their megaphone. Media attention tends to “normalize” what a dominant institution or industry wants rather than society shaping the institution, industry or government. This is inherently at odds with the principles of democracy and free-market capitalism in that it perpetuates a top-down sphere if influence.

    At its most basic level the problem amounts to this: BIG is complex and what is complex is bureaucratic and what is bureaucratic is less than transparent and what is not transparent will corrupt. There is no need of a “grand conspiracy” to arrive at a place where governments and institutions no longer function as “good citizens” because we’ve engineered a policy or system in which the bad actors can hide. (For instance, the complexity of the tax code allows 2/3 of US corporations to pay no federal income tax whatsoever according to a congressional study. How long does a country that relies only on an increasingly indebted consumer for its solvency and profit survive when the moneymakers and the money collectors in government don’t do their part?)

    We tend to base practices and policies around false assumptions — that is to believe that whether it is business or a form of governance success is to grow, in which case BIG is a reflection of merit. We believe free markets reward the winner, thus it has become unfashionable to cut monopolies back down to size. This argument is paradoxical, too, in that we perceive BIG as efficient in the private sector, inefficient in the public sector. This becomes the disconnect between what we see workable in the small sense as opposed to what can work on a broader scale.

    I truly feel that the answer to one-size fits all globalism, agriculture, banking, government and policy is to scale private and public ventures down to a manageable, transparent size that by virtue of its organization can no longer insulate itself from “market demand”, be it the consumer or a voter. We need institutions that are responsive and responsiveness is a function of simplicity. You cannot foster mutual respect in finance, government or business if scale alone defeats the need to serve your customer or your constituent. If one is insulated by scale one can inflict policy and practices, monetary and otherwise, that are increasingly at odds with ordinary people — and get along with it just long enough that by the time the damage is done to your product, service, community or society that repairing damaged trust and righting the institutional or industry wrongs is near to impossible. Keeping governments and businesses small means that they can lose their influence and the fear of losing market or influence forms the incentive to operate above board. To grow an industry or government to international scale is to inherently undermine the ability to serve and succeed in the long run.

    The most basic of objectives in any business, social or political transaction must be kept front-and-center. A society that does not function for its members is unworkable. A sense of unrequited frustration over what or whom to believe or blame will lead to economic volatility, if not civil unrest. To change the dynamic of the too-big-to-fail and its too-big-to-care “evil twin” we must remember that the best laid policies and highest ideals cannot survive “institutionalized complexity” (indifference caused by overgrowth as a product of one’s own success). Trust is the prerequisite to any interaction between people, governments and institutions. Simplicity and accountability — bringing decisions back down to local markets and local governance — is the first and most essential step.

  21. Left out of the two comments above is the possibility of “intent” of the malefactors who brought us 2008 as tragic “Crisis,” which must be seen rather as a probability (can certainty enough exist for indictment?) by those who listened to Joseph Vogl’s address, “Sovereignty effects,” during the first day of the INET Plenary Conference 2012 in Berlin (12 April 2012). At the INET website — — is a video of Prof. Vogl’s address to the audience, as well as a copy of his paper, available as a pdf.

    The open-mindedness of the movers and shakers at INET made the presentation of Prof. Vogl’s invaluable contribution possible at an international Economics conference, for Prof. Vogl is a Professor of German Literature, Cultural and Media Studies, at Humboldt University in Berlin. His insights into “Economics + Politics” are flawlessly keen, deriving humbly from his “Humanities” perspective, yet he may have nailed the crux of the “Crisis” to the Door of Reality. The basis of his insights comes from a “forgotten” book to which he refers the audience: “Considerations politiques sur les Coups d’Etats” — written by Gabriel Naude and published in 1639. The matter of “intent” rears its ugly head from a “forgotten” era to make us see the “Thirty-Years’ War” of Neoliberal Economics + Politics in a spot light, rather than by candlelight. The paper and the talk are highly recommended to those with “eyes to see and ears to hear.” Surely Prof. Vogl has earned his place among other leading lights who spoke at INET’s “PARADIGM LOST” — such as Steve Keen, Michael Hudson, and John Kay, who likewise spoke with incredible audacity, seeking to open our eyes to a “harsh reality.” May these brave men, together with William K. Black, take the bull by the horns forthwith, with a little help from their friends. Can the Coup d’Etat suggested in Vogl’s paper/address be proven?

    Prof. Vogl serves to vindicate INET’s “open door policy,” in its examination-to-ground of “Economics + Politics” for our everlasting benefit. This is New Economic Thinking in deed. Now it’s hard to imagine any other way of thinking about this complex domain in reality.

    • Bayard Waterbury

      Dr. Bernard, thank you so much for the referal to Joseph Vogl’s remarkable paper and speech. You are so right, that even though Vogl is not an economist, he has nailed the genesis and depth of the relationship between “big” finance and governance to a tee. In listening to his speech I was reminded of the wonderful book by Naomi Klein, “The Shock Doctrine” and Vogl even refers to a part of the Klein story regarding the emergence of this deadly alloy in Chili in the 1960’s. She sees this entire reality as one sponsored by the economic theories of Friedman, the famed neo-conservative Chicago University economist and professor, whose disciples spread throughout the history of the growth of this merger all over the world, beginning in South America, then migrating to Indonesia, and ultimately to the US under Reagan, Russian under Bresznev, and even to China. Of course these economic theories were easy to foist on the semi-third world states in South America, and were always introduced to the various world economies during periods of economic and political upheaval (Russia in 1991 is a perfect example).

      Professor Vogl is one of us, that is, like Professor Black and a very few others, he has identified the toxic nexus which has led us directly and unwittingly into the jaws of plutocratic rule. Anyone who fails to understand, not just that America has become nearly a perfect plutocracy, but who fails to recognize the this infection has totally consumed our present political structure with an iron grip, is going to suffer mightilly, if not doing so already. Sadly for America, one of the major co-conspirators in the romanticizing of destructive policies has been the main stream media. They are controlled by both their interlocking ownership by super wealthy individuals and corporate interests, but also they derive almost all profit from their support of the status quo. For this reason, unless one reads the plethora of good literature produced to explain our crisis, or visits the important internet sites, such as this one, one cannot begin to understand how thoroughgoing the control of our nation has become. When I consider what has happened I always think of that magical moment during which Loyd Blankfein in his Congressional testimony said that he was only doing “God’s Work!!” This quite simply and clearly reflects the sociopathy of the thinking of the 1%ers. They have come to believe that they are “our” saviors, and that what they do is the ultimate good. What a dark abyss lies between their thinking and reality. This is what T. S. Eliot wrote about in his famous, amazing poem “The Hollow Men” which ends with “this is how the world ends, not with a bang, but a whisper” and appropriately describes that corrupt chasm in which the plutarchs operate.

  22. How would one of you columnists feel about being the lead economist to a President some time in the future?